The Rise in Corporate Jet Spending

US corporate spending on air travel has risen for the second year in a row, highlighting how companies continue to spend on flight perks they insisted were necessary during the covid-19 pandemic. Aircraft spending for chief executives of S&P 500 companies rose to $41.3 million last year, up 22 percent from a year earlier and the highest amount in at least 10 years, according to data from ISS Corporate Solutions.

1. Facebook’s parent company, Meta, was the top spender among S&P 500 companies on personal air travel for a CEO, reporting $2.3 million in private flights for Mark Zuckerberg.
2. Anger over corporate jet spending has faded since bank and auto company executives were punished for flying private jets to Washington during the Great Financial Crisis.

But the optics of big corporate jet travel could still be tricky for executives, said Matteo Tonello, managing director of The Conference Board. “With a growing debate about inequality, it can be a problem for a company if its leaders publicly display their privilege,” he said. Such trips can also appear to clash with a company’s efforts to reduce carbon emissions.

The Impact of the Covid-19 Pandemic

As Covid-19 engulfed the world in 2020, companies extended private jet privileges, arguing that the increased spending was justified to prevent executives from catching the virus. Covid-19 infections continued to spread across Europe in the winter of 2022 and again in the US spring. But some companies have since removed their Covid flight policies.

• Exelon, a Chicago-based utility, said it had canceled the expansion of air travel for executives and directors in December. Its spending on aircraft increased from $667,435 in 2021 for its CEO and two other executives to more than $1 million in 2022, regulatory disclosures show.
• Insurance broker Arthur J Gallagher reported a Covid flight policy in 2022 and 2021, and removed references to pandemics from its regulatory filings this year. A Gallagher spokeswoman declined to comment.

Repercussions and Shareholder Perspective

Securities and Exchange Commission rules generally require companies to report executive air travel as part of their pay package. Shareholders often downplay corporate jet spending as a small part of executives’ total salary. But bills for big planes can trip businesses up.

ISS highlighted Accenture’s big aircraft spend for CEO Julie Sweet in 2022, which more than doubled from the previous year. Shareholder support for executive pay at the consultancy fell this year to its lowest level since 2011. Accenture did not respond to requests for comment.

Marian Macindoe, corporate governance officer at asset manager Parnassus, said the company will include “excessive awards” when considering voting against a company’s pay plan. In addition, the use of personal jets by executives “often goes against [a] the company’s climate goals. “We do not necessarily support a directive to return to private flying at pre-Covid levels because the use and benefit of private jets is situational,” he said. “However, reducing the use of corporate jets generally helps reduce greenhouse gas emissions, which supports climate action goals.”

Unique Insights into Corporate Jet Spending

While the rise in corporate jet spending may raise eyebrows, there are several factors to consider when examining this trend in greater detail. Let’s delve deeper into the subject matter and explore related concepts and practical examples to gain a comprehensive understanding of the implications.

The Balancing Act: Privilege vs. Perception

Corporate jet travel can be a double-edged sword for executives. On one hand, it provides convenience, security, and efficiency for business travel. On the other hand, it can be seen as a display of privilege, especially in an era where debates about inequality are gaining momentum.

Corporate Jet Travel and Environmental Considerations

Another aspect worth examining is the alignment of corporate jet travel with a company’s efforts to reduce carbon emissions. While some companies argue that the efficiency and time-saving benefits of private jets justify their use, others question the environmental impact of such travel.

Practical Examples of Corporate Jet Usage

Examining specific cases of corporate jet spending can shed light on the diverse reasons behind this trend. Let’s take a closer look at two prominent companies that have attracted attention for their executive air travel expenses.

Meta (formerly Facebook) – Mark Zuckerberg and Sheryl Sandberg

Meta, formerly known as Facebook, has been a top spender on personal air travel for its executives. In 2022, the company reported $2.3 million in private flights for CEO Mark Zuckerberg. However, this amount was overshadowed by the more than $4 million spent on former COO Sheryl Sandberg.

Netflix – Reed Hastings and Ted Sarandos

Netflix, a prominent player in the entertainment industry, has also made headlines for its corporate jet spending. Co-CEOs Reed Hastings and Ted Sarandos received more than $50 million each, drawing scrutiny from shareholders. The company’s stock price decline further contributed to the discussion around executive pay and perks.

Factors Influencing Corporate Jet Spending

Several factors contribute to the rise in corporate jet spending among S&P 500 companies. Let’s examine some of these factors and explore their impact on executive air travel expenses:

1. Perceived safety and security concerns during the covid-19 pandemic
2. Demand for efficient and convenient business travel options
3. Executive lifestyle expectations and perks
4. Corporate image and reputation management

The Role of Shareholders

Shareholders play a crucial role in shaping corporate policies and decision-making, including executive pay and perks. The scrutiny and discussion around corporate jet spending reflect shareholders’ concerns regarding excessive compensation and the alignment of executive perks with a company’s values and goals.